RPAA safeguarding of end-user funds in Canada
Under section 20 of the Retail Payment Activities Act, a payment service provider that holds end-user funds until they are withdrawn or transferred must keep them in trust in a trust account used for no other purpose, or in an account used for no other purpose backed by insurance or a guarantee at least equal to the amount held. Since 8 September 2025 these providers must also keep a written safeguarding-of-funds framework with an end-of-day ledger of each end user's funds, and report on safeguarding to the Bank of Canada in an annual report due by 31 March.
This page explains the rules in general terms and is not legal or regulatory advice. Check the primary source and take advice on how the rules apply to your firm.
Jurisdiction: Canada · Regulator: Bank of Canada
Who is in scope
- The safeguarding duty applies to a payment service provider whose retail payment activity is holding end-user funds until they are withdrawn by the end user or transferred to another individual or entity (RPAA subsection 20(1)). source
- Funds are held when they are at rest and available for future withdrawal or transfer and the provider is indebted to the end user. Funds received with an instruction for immediate transfer are 'in transit' and do not need to be safeguarded (Bank of Canada guideline, paragraphs 1.3.1 to 1.3.3). source
- A provider with a place of business in Canada must safeguard all end-user funds it holds, including funds of end users outside Canada. A provider without a place of business in Canada that directs retail payment activities at Canada must safeguard only funds held for end users in Canada (guideline, paragraphs 1.5 and 1.6; RPAA sections 4 and 5). source
- A provider is not holding funds before it receives the end user's funds, and funds reserved specifically to mitigate chargeback or fraud risk are not treated as held (guideline, paragraphs 1.7 and 1.8). source
- The Act does not apply to banks, authorized foreign banks, provincially regulated credit unions and caisses populaires, insurance companies, federal and provincial trust and loan companies, and certain other listed entities (RPAA section 9). source
- Although the Act allows regulations to prescribe other safeguarding methods, none are prescribed, so the options are a trust account or insurance or a guarantee (guideline, paragraph 2.3). source
What the rule requires
| Requirement | How often | Source |
|---|---|---|
| Segregate end-user funds from all other funds, including the provider's own funds and client funds for activities outside the RPAA, in a safeguarding account used for no other purpose and with its own account number, and do not pay salaries or operating expenses from it (guideline, paragraphs 2.4, 2.5 and 2.10). | ongoing | source |
| Place end-user funds in the safeguarding account on receipt. Where unavoidable processing constraints prevent this, the Bank expects placement at the latest on the Bank of Canada business day following the day of receipt (guideline, paragraphs 2.6 to 2.8). | daily | source |
| Hold the safeguarding account with a bank, authorized foreign bank, credit union or caisse, provincial deposit-taking body, or trust or loan company listed in RPAA paragraphs 9(a) to (d) or (f) to (h), or with a foreign financial institution under comparable prudential standards (RPAR section 13). | ongoing | source |
| The account provider cannot assert any right of set-off or compensation against funds in the safeguarding account (RPAA subsection 20(3)), and the Bank says the provider should receive written acknowledgement of this from the account provider (guideline, paragraph 2.16). | ongoing | source |
| Where insurance or a guarantee is used, the provider must be an eligible institution not affiliated with the payment service provider; proceeds must not form part of the provider's estate, must be payable to end users as soon as feasible after an insolvency event and must survive insolvency or restructuring (RPAR section 14). Cover must always be at least the amount in the safeguarding account (guideline, paragraph 2.42). | ongoing | source |
| Keep a written safeguarding-of-funds framework that includes a ledger setting out the name and contact information of each end user and the amount of that end user's funds held at the end of each day (RPAR paragraph 15(2)(b)). The Bank expects the ledger to be updated each day, and as best practice in real time (guideline, paragraph 3.9). | daily | source |
| Identify a senior officer responsible for safeguarding; have the framework approved by that officer at least once a year and after each material change, and by the board at least once a year (RPAR subsections 15(4) and 15(5)). | annual | source |
| Review the framework at least once a year, after any change in the method used to safeguard end-user funds, and after changes that could reasonably be expected to have a material impact on how end-user funds are safeguarded, such as opening or closing a safeguarding account, changing account provider or account terms, or changing insurer or guarantor (RPAR subsection 15(6)). | annual | source |
| Take measures to identify, as soon as feasible, any instance in which held funds would not have been payable to end users on insolvency, investigate the root cause immediately and prevent recurrence (RPAR section 16). As best practice the Bank says providers should take daily measures to identify shortfalls (guideline, paragraph 4.4). | ongoing | source |
| A provider using the trust method that retains interest earned on end-user funds must ensure this does not compromise or invalidate the trust arrangement (Bank of Canada letter to industry, 23 December 2025). | ongoing | source |
Deadlines
- The requirements to establish risk management and funds safeguarding frameworks came into force on 8 September 2025 (Bank of Canada key milestones page). source
- The annual report for a calendar year must be submitted no later than 31 March of the following year (RPAR subsection 18(1)). source
- A provider must notify the Bank at least five business days before a significant change, which includes a change that could reasonably be expected to have a material impact on how end-user funds are safeguarded (RPAR paragraph 20(1)(a); RPAA subsection 22(2)). source
- The Bank must be notified at least 30 days before any cancellation or termination of the insurance or guarantee (RPAR paragraph 14(2)(d)). source
- An independent review of compliance with the safeguarding requirements must be carried out at least once every three years by a skilled individual with no role in the framework or in shortfall identification (RPAR subsection 17(1)). source
Records and evidence
- The annual report must name each entity providing a safeguarding account and its supervising regulator, any other payment service provider through which an account was obtained, and each insurer or guarantor with the terms of cover (RPAR subsection 19(2)). source
- The annual report must also describe the safeguarding means and any trust arrangement, the safeguarding-of-funds framework, each shortfall instance identified in the year with its root cause and remedial measures, and any independent review conducted (RPAR subsection 19(3)). source
- Providers with a place of business in Canada report the maximum end-user funds held during the year and, for each month, the average end-of-day funds held in Canadian dollars and by currency, for all end users and for end users in Canada (RPAR subsection 19(4)). source
- All reports and notifications are submitted through the Bank's PSP Connect portal (Bank of Canada reminder, 29 June 2026). source
- Providers must keep a record of each framework review (date, scope, methodology, findings) and of each independent review (RPAR subsections 15(7) and 17(2)), and must retain compliance records until five years after they cease to demonstrate current compliance (RPAR section 40). source
- For providers using the trust method, the Bank will request a written legal opinion describing how a valid express trust has been established under common law or the Civil Code of Québec (Bank of Canada FAQ). source
Inputs when money sits across banks, partners and wallets
| Input | What it feeds | Rule |
|---|---|---|
| End-of-day balance held for each end user, with name and contact information | The ledger required by RPAR paragraph 15(2)(b) | source |
| Status of each receipt as held or in transit, based on whether and when an instruction for immediate transfer was received | Only held funds are safeguarded, but records must cover all funds received, including funds in transit (guideline, paragraphs 1.3.3, 1.4 and 3.8) | source |
| Daily totals of end-user funds held, end-user funds safeguarded and end-user funds still to be placed in a safeguarding account | Ledger totals the Bank expects (guideline, paragraph 3.7.1) and the shortfall methodology in section 4 of the guideline | source |
| Balance of each safeguarding account at each account provider, with the provider's regulator and, for foreign institutions, evidence of comparable prudential standards | Account provider rule (RPAR section 13) and annual report content (RPAR subsection 19(2)) | source |
| Time each receipt reached the provider and time it was moved into a safeguarding account | Funds not placed on receipt are shortfalls to be recorded and reported (guideline, paragraphs 2.7, 2.8 and 4.8) | source |
| Current insurance or guarantee cover compared with end-user funds designated to that cover | Systems must detect when cover falls below the designated amount (guideline, paragraph 2.46) | source |
| End-of-day end-user funds by currency, in that currency and in Canadian dollars, split between all end users and end users in Canada | Annual report metrics (RPAR subsection 19(4)) | source |
| List of agents, mandataries and third-party service providers that receive end-user funds or take transfer requests, and their role in returning funds | Procedures for returning funds on insolvency (guideline, paragraph 3.31) | source |
| Currency or unit of each balance held, including any unit other than the currency of a country | Retail payment activities cover transfers in the currency of Canada or another country or using a unit that meets prescribed criteria (RPAA section 2) | source |
Where Polynopsis fits
Polynopsis gives finance teams one read-only, timestamped position across every bank, payout partner, exchange and wallet, which is the balance data a safeguarding reconciliation starts from. It is not safeguarding or reconciliation software, and it works alongside the tools and processes firms use to meet these rules.
Frequently asked questions
Is CDIC deposit insurance enough to meet the RPAA safeguarding duty?
Add to in_scope: {"fact": "The Bank of Canada says deposit insurance protects the account holder, which is the payment service provider, if the account provider fails, and is not paid out when the payment service provider itself becomes insolvent; holding end-user funds only in an account at a member of a federal or provincial deposit insurance program does not meet subsection 20(1) of the RPAA (Bank of Canada FAQ).", "source_url": "https://www.bankofcanada.ca/2026/08/frequently-asked-questions-about-retail-payments-supervision/"}
Do funds received for immediate transfer have to be safeguarded?
No. Funds received with an instruction for immediate transfer are in transit, not held, and fall outside the safeguarding requirement. The provider must still keep accurate records of them.
Does a foreign provider safeguard funds for end users outside Canada?
Only if it has a place of business in Canada. A provider without one, that directs retail payment activities at Canada, safeguards only funds held for end users in Canada.
How often is an independent safeguarding review required?
At least once every three years, by a skilled individual, internal or external, who had no role in the framework or in identifying shortfalls. Gaps found are reported to the senior officer.
Other rules
Sources
- Retail Payment Activities Act (S.C. 2021, c. 23, s. 177), current to 30 September 2026 · Justice Laws Website, Government of Canada
- Retail Payment Activities Regulations (SOR/2023-229), current to 30 September 2026 · Justice Laws Website, Government of Canada
- Safeguarding end-user funds: supervisory guideline (December 2024) · Bank of Canada
- Retail payments supervision: key milestones (updated 30 June 2026) · Bank of Canada
- Reminder: PSP reporting obligations under the RPAA (29 June 2026) · Bank of Canada
- Letter to industry: update on trust tax issue (23 December 2025) · Bank of Canada
- Frequently asked questions about retail payments supervision · Bank of Canada
Know where all your money is.
Polynopsis gives cross-border payment teams one live position across every bank, payout partner, exchange and wallet, including money in flight, and warns before a corridor runs dry.